Risk Assessment and Management: Water System

Basic concepts and core issues of risk assessment and management
Key questions and issues
n What is risk?
n Why analyse and manage risks?
n Can we avoid risks?
n If not, how much risk dare we accept?
n Core concepts
Colloquial definition:
n A risk is “a chance of a loss or injury or damage…..”

Definitions used in risk assessment and management:
n Actuarial definition: Level of risk = (frequency x consequences) for a hazard, or across a set of hazards
n Risk manager’s definition: Level of risk = frequency x exposure x vulnerability

What is a Risk?
A risk arises when there is a threat to what we regard as an acceptable level of
n Safety, health, and well being
n Security (physical and material)
n Performance, efficiency, service
n Reliability, effectiveness
n Awareness, understanding
Threats can arise from, for example:
n Physical hazards
n Accidents
n Breakdown of plant and equipment
n Failure of systems (including human systems!)
n Uncertainty

Most threats arise from circumstances that combine several of the above!


Why analyze and manage risks?
n To understand what we’re up against
n To take appropriate action to reduce risks to acceptable levels
n In so doing, to provide assurances about safety, performance, and reliability
Can we avoid risks?
In most cases no - but we can try to:
n Reduce some of the risk (by controlling the frequency of, exposure to, and vulnerability to hazards)
n Transfer some of the risk (to a party willing to take on the risk)
We then have to accept the residual risk!
How much risk dare we accept?
Risk acceptance depends on a range of factors
including:
n Level of risk – may sometimes be more strongly influenced by concerns over impact rather than frequency
n Frameworks of values and beliefs
n Circumstances – vulnerability and resilience
n Choices available
n Awareness of the full level of risk – what are all the potential impacts of hazards, events, or uncertainty?

This has important implications
Often (especially in the context of water systems) we are asked to assess and to manage risk on behalf of others - this requires approaches that are:
n rigorous and systematic
n make best use of data and expertise
n democratic
n transparent
n can support decision making
n well understood in terms of their limitations
Core issues relating to the concept of risk
n Risk is bound up with probability and uncertainty – there is a likelihood of rain tomorrow, but will it rain?
n Risk involves loss (and opportunity) – someone’s loss can be another’s gain
n Perceptions of risk vary – why aren’t we all scared of flying?
n People accept different levels of risk – why don’t we all bungee-jump?
Core issues relating to analysis of risks
n Assessment or analysis of risks is rarely precise and often imprecise
q Actuarial methods – based on the interpretation of failure/impact datasets
q Observational methods – based on available evidence and expert judgement
n There is often an irreducible level of uncertainty which we have to accept
n Since perceptions of risk vary, we need to avoid bias in analysis
n There is no universal measure of risk – parameters and values vary between different risks and stakeholders

Core issues relating to risk management
n Actions can be taken to reduce, to share, or to transfer risks - but risks can rarely be eliminated
n There are theoretical, practical, and cost limitations on our ability to reduce risk:
q Inherent irreducible uncertainty
q Complete control may not be feasible
q The cost of complete protection may not be affordable
n Differences in perception and attitude influence arrangements to share or to transfer risks
n Risks can be shared or transferred through:
q rules and agreements
q insurance
q legislation

Nature of uncertainty
Uncertainty can arise from:
n random influences
n incomplete information
n lack of precision (fuzziness)

Examples of types of uncertainty
Random influences
Incomplete information
Fuzziness
Changes in the weather
Climate change effects
Lack of precision in data
Variation in water flows, levels, quality
Limitations to model formulation
Lack of precision in descriptions and models
‘States’ in the physical world
The condition of buried infrastructure
Lack of precision in observations
Human responses (eg reaction times)
Likely human behaviour
Unclear understanding of preferences and values

Applying concepts of risk assessment and management to water systems
Applications to water systems
n General conceptual models and their application to:
q Water supply systems
q Flood risk management
n Related issues:
q Risk based decision making
q Sustainability
Conceptual model of risk creation- the risk triangle
-Event frequency
-Exposure to hazards created
-Vulnerability to hazard’s effects
Conceptual model of risk
Causes: natural or man-made
State depends on:
• preparedness
• physical condition
• exposure to drivers
• vulnerability to hazards
Impacts: loss, damage and disruption
Response:
• control drivers
• modify state
• mitigate impacts
Conceptual model of risk propagation:
Sources–Pathways–Receptors’ model

Sources of hazards find pathways to receptors (which through their exposure and vulnerability to hazards are changed). Risks arise from unacceptable changes in receptors.
System and feedback
Water systems are inherently dynamic:
n Positive feed-back occurs when, say (at a DSIR scale), consumers reduce demand for water in the face of a water shortage to help restore the balance between supply and demand
n Negative feed-back occurs when, say (at a SPR scale), overtopping of a flood embankment causes erosion of the embankment leading to embankment failure and more flooding
Implications are:
n Feed-back loops need to be identified and understood
n Can provide opportunities for good risk management
n Limits the application of linear sequential models
n Require systems models
Drivers-state-impacts-response system for water supply
Drivers: environment, weather & climate, social economic, attitude
State depends on:
• available supplies
• water quality
• asset condition
• operational constraints
• vulnerability & flexibility
Impacts: disruption, loss, damage, change in attitude
Responses – typically focus on
Safety, reliability, and efficiency:
• control drivers (eg reduce demand)
• modify state (eg increase supply,
More flexible operations)
• mitigate impacts (eg contingency measures)

Examples of risks that may need to be managed
Impacts
People
Environment
Economy
Disruption
Lack of continuity of water supply
Distortion of a natural flow regime
Rescheduling use
Loss
Loss of security of water supply
Loss of environmental minimum flows
Loss of output (agricultural or industrial)
Damage
Damage to public confidence
Damage to sensitive habitats
Damage to consumer confidence
Changes in attitude
Rising public expectations
Attitudes to the environment
Customer preferences
Examples of measures of risks
Impacts
People
Environment
Economy
Disruption &
loss
Frequency, duration, numbers affected?
Frequency, duration, systems and numbers affected?
Frequency, duration, cost of rescheduling use, output lost?
Damage
Frequency, degree of damage to public confidence?
Frequency, duration, timing, degree of environmental damage?
Frequency, degree of damage to consumer confidence?
Changes in attitude
Degree of change in public expectations, where, how prevalent?
Degree of change in attitudes to environmental systems, where, how prevalent?
Degree of change in customer preferences, where, how prevalent?
Drivers, state, impacts, response model for a flood risk management system
Drivers: environment, climate, socio-economics, laws and directives, politics
State depends on:
• flood producing processes
• existing flood defences
• available resources
• inherent robustness & resilience

Impacts
Flooding, damage, loss or injury, disruption
Responses – typically focus on equity, integration, and sustainability:
• control drivers (eg manage flood regime and public expectation)
• modify state (eg increase security of flood defence systems,
Integrate management of flooding, ensure good governance)
• mitigate impacts (eg emergency measures, flood relief)
Examples of risks that need to be managed
Impacts
People
Environment
Economy
Flooding
Exposure to physical hazards
Exposure to flooding
Constraint to economic opportunity
Loss
Loss of life and possessions
Loss of environmental systems
Loss of infrastructure; economic output; and value
Damage
Injury, damage to public health
Damage to sensitive habitats
Damage to infrastructure
Disruption
Loss of sense of well-being and security

Disruption of activities, operations and services

Risk based decision making
n First consider any legal targets or agreed requirements for risk control levels
n Compare cost of risk reduction with benefits gained – a ‘utility’ criterion
n Evaluate level of risk against ‘equity’ criteria –what is a fair distribution of risk?
n Consider ‘political’ criteria – these tend to be driven by people’s attitudes and expectations
Examples of risk related evaluation of criteria
Impacts
People
Environment
Economy
Disruption &
loss of water supply
Customer level of service targets
Environmental targets or minimum needs
Customer level of service targets and security of supply targets
Damage to consumer confidence
Desired degree of public confidence
Significance and value of habitats affected, extent of damage, resilience
Desired degree of consumer confidence
Changes in public attitudes
Willingness to pay, social and political preferences
What is a sustainable attitude to, and set of values regarding the environment?
Customer satisfaction
Impacts
People
Environment
Economy
Incidence of flooding
Vulnerability of population affected by flooding
Significance of designated habitats and areas of environmental value
Value of lost opportunity
Loss from floods
Unacceptable levels of losses compared with cost of risk reduction
‘Expected’ loss of environmental systems compared with cost of risk reduction
‘Expected’ loss of output (agricultural or industrial) compared with cost of risk reduction
Damage from floods
Unacceptable levels of damages and poor health
‘Expected’ damage to sensitive habitats compared with cost of risk reduction
‘Expected‘ damage to infrastructure compared with cost of risk reduction
Disruption due to flooding
Unacceptable level of disruption and loss of sense of security

Extent to which activities, operations and services could be disrupted

Three related challenges
Risk analysis is often used to support decisions:
n made in the face of complexity
n made in the face of uncertainty
n that seek sustainable solutions

… this requires the integration of risk analysis with techniques to aid decision making!
Decisions in the face of complexity
n Understand the systems involved – human (political, social, economic, technical) and environmental (climatic, physical, ecological, etc), their boundaries, and their interactions
n Understand the basis of the analysis in each of these areas – these can be highly specialised
n Involve stakeholders in the decision making process
n Decisions often involve multiple (sometimes conflicting) objectives and criteria – these require tradeoffs to be explored and resolved
n Decisions often involve different value systems – these need to be identified and reconciled
n The basis of the final decisions need to be clear and auditable
Decision in the face of uncertainty
n Consider sources of uncertainty and their implications – will we ever reduce fuzziness or eliminate random effects?
n Determine where and how uncertainty could be reduced – it may be worth postponing a decision
n Consider the implications of making the wrong decision – is it worth the gamble?
n Consider applying the precautionary principle – avoiding a direct gamble, but in itself a gamble!
n Try to identify choices that are adaptive, flexible, and resilient – as a ‘hedge’ against uncertainty

Sustainability
n Balance social, environmental, and economic factors – recognising that each has different units of value
n Work within rather than against natural systems – to reduce exposure to hazards and unforeseen change
n Recognise the dynamics of systems and interactions between systems – look out for negative feed-back loops!
n Recognise the indeterminate aspects of natural systems and human behaviour

… look for solutions that are adaptive, flexible, robust and resilient!
Why analyse risks
To assess, identify, and to understand better:
n Sources of risk
n The extent of risk exposure
n The degree of vulnerability
n The range of consequences
n Levels of risk

…all of which we can then evaluate against risk acceptance criteria in order to make decisions about how best to manage risks
Why do we manage risks
To control risks to levels that are acceptable to us and/or to others regarding:
n Safety, health, and well being
n Security (physical and material)
n Performance, efficiency, service
n Reliability, effectiveness
n Awareness, understanding
The risk assessment and management process
1) Identify hazards and sources of risk
2) Assess frequency of occurrence
3) Assess consequences (which depend on exposure and vulnerability)
4) Estimate levels of risk and uncertainty
5) Compare levels against acceptance criteria
6) Evaluate implications
7) Decide how best to respond
8) Take actions to manage risk